News that councils are running out of reserves will come as no surprise to anyone involved in local government.
It confirms what I and many of my counterparts around the country have been saying for years: councils have been hardest hit by austerity.
The die was cast in 2010 when the then secretary of state, Eric Pickles, offered up the largest cuts of any government department to the Treasury.
Since then, in Liverpool alone, we have lost £441m, which equates to £816 less for every resident of the city, and is the largest per capita cut in the country – and equates to about two-thirds of our budget.
Our rainy day reserves, those which are not earmarked for anything and not held on behalf of anyone else, now stand at just over £16m – less than 4% of our net budget and well below the 5% that the Audit Commission (also axed by Eric Pickles) used to recommend.
And not only did Whitehall cut us off at the knees by slashing our funding, it also hampered our inability to bring in more income by freezing and then capping council tax rises.
That is why I have called for a royal commission to create a fair and transparent system of financing local government.
We require a system that responds to local need and properly funds the key services we provide, and an end to an approach that is currently too short-termist and opaque about how allocations are made.
It is a system that discriminates against northern towns and cities such as Liverpool – where most of our housing is small terraced properties in the lowest council tax band – in favour of shire counties, which are awash with larger properties. Perversely, there are reports it will be shire counties that benefit most from the current review of the council tax funding formula.
We also need to future-proof local government to take into account the rising demand for adult services and support those councils dealing with ingrained social and economic problems that are compounded by the evils of the universal credit roll-out. We desperately need a system that focuses on need and helps us strengthen and grow our local economies so that councils are better able to generate new forms of income and become more self-reliant.
We want a return to an era where councils devised their own practical solutions to problems, rather than having them handed down by central government. The Treasury needs to trust local government and give us more powers and freedom over resources.
But it’s abundantly clear that with Brexit dominating the domestic political agenda and parliament in deadlock, the needs of desperate councils – especially larger urban authorities such as Liverpool – are way down the ministerial pecking order. So we cannot sit on our hands waiting to be rescued by a friendlier climate in Westminster. All the evidence so far is that they aren’t listening.
That is why we have launched a new municipal housing company, Foundations, in order to rebalance the housing market in Liverpool to boost our income from council tax. We will use capital borrowing to buy, renovate and build homes, addressing affordability and improving the mix of housing across the city, helping groups such as foster carers and the elderly by creating homes and sheltered housing aimed at them, as well as offering rent to buy.
Decades of underinvestment mean we’ve got potholes in Liverpool that will cost £400m to repair – the problem is we have a budget of only £4m to fix them. So we’re borrowing to tackle a huge backlog in road repairs so that our highways are fit for the present and the future – fit to handle increased traffic around the new Port of Liverpool, as well as the Ten Streets regeneration in the north of the city, among many other projects. And it’s why we’re working with the private sector on the £1bn Paddington Village scheme to develop 1.8m sq ft of science, technology, education and health space.
Government and ministerial indifference has left councils around the country with little option other than to be creative, bold and entrepreneurial.